BPM 101: DashboardsThe first in a series of comprehensive guides

This article is the first in a series of comprehensive guides to help you successfully plan and execute all phases of your business performance initiatives.

A dashboard initiative may seem fairly straightforward at first: find an easy-to use, technologically compatible dashboard tool (you may even already own one) and populate it with the key measures the executives have been tracking for years on their hardcopy reports. Sit the whole thing on top of your recently completed data warehouse, and you're done. Unfortunately, if you do just that, you will have missed the whole point of business performance management.

To maximize the potential return on your dashboard initiative, let's start at the beginning. The first thing you need to do is determine the scope of your performance dashboard project. Will this be a departmental dashboard for IT or sales or some other functional area? Will it be a corporate-level dashboard only? Will it be a combination of the two that are interconnected? How about an employee-specific dashboard that brings the corporate goals and measures down to an individual, actionable level? Once you determine the scope, you can begin to identify your key stakeholders. This is not a project that the IT team can work on in a corner and simply deliver when done.

An important element of any dashboard initiative is to understand or define the overall corporate strategy. If the true goal of business performance management is to enable companies to successfully execute on their strategies, it's key to understand the scope of that strategy. Dashboards measure the success of execution and identify areas that need attention. How to determine/develop this strategy and the key performance indicators (KPIs) that tie back to it is a topic that will be covered in a future article in this series; but for now, let's assume you know what you are trying to accomplish as a company.

Once you have identified your stakeholders, as a group you need to make some important decisions regarding your dashboard initiative. First, you'll need to determine what methodology (if any) will be used to structure your KPIs. A number of companies utilize the balanced scorecard approach, which has the benefit of ensuring that your KPIs are a good mix of internal and external measures and are both financial and non-financial in nature. As a fairly rigorous methodology, it will require you to invest in some education and probably some expert consulting as well as the time required to follow through on its prescribed steps. For this reason, some companies skip the strict adherence to the balanced scorecard methodology, but still try to maintain a mix of financial and non-financial measures. This is a good idea as financial measures tend to focus on what has already happened while non-financial measures are often good leading indicators of what may happen. Other methodologies to be considered include Stern-Stewart's EVA (Economic Value Add), Six Sigma or a hybrid combination of multiple approaches.

Once you have your KPIs determined and organized, a number of important activities need to take place. Often these key measures are actually complex calculations. Therefore, an expert needs to be identified for each KPI so that the implementation team can accurately determine how the KPI is derived. A major task that will evolve out of this is identifying the location from which the component data elements can be retrieved. This will raise all the usual data issues of accessibility, security, data quality, as well as format, currency and scale. When it comes to non-financial KPIs in particular, you may find that the data simply doesn't exist in electronic form or is sitting on someone's personal spreadsheet. You will have to figure out how you are going to get this data. Maybe it needs to be added to an existing system so it can be collected regularly with all the other data. If the data is only required for the dashboard project, it is sometimes best to just have someone input the data as needed.

Now that you know what you are measuring and where to get the data, we can move on to the next topics for the key stakeholder group. The most important thing to determine is your targets for each of your key measures. To see how you are performing, you need to compare your actual results as they come in to some agreed-upon target. This could be last year's data (you want to surpass last year's performance by 10%, for example). Or, it could be industry benchmarks (other companies in our industry have on average achieved a 30% margin so we want to equal or exceed that). The most common target used by companies, however, is their budget. In effect, this analysis would translate to: this is how we planned to perform, and now let's see how we actually did. That is why without having a solid budgeting and planning system in place (Excel doesn't count), it is difficult to do business performance management well.

The last element to consider is action plans and ownership. When one of your key measures is significantly out of range, what will you do differently as an organization and who is responsible for doing it? The ownership and general plan of attack should be decided up front. You can rest assured that when you are sitting in a meeting and one of those measures is in the red zone, no one is going to stand up and claim responsibility. By the way, if a KPI isn't actionable (you cannot impact it), it probably shouldn't be a KPI.

At this point, you need to determine the appropriate technology solution to support your newly designed dashboard initiative. We will cover the details of vendor selection in an upcoming BPM 101 article.

Craig, a pioneer in business performance management, helped create and define the field as it evolved from business intelligence and analytic applications into BPM. He has worked with BPM and related technologies for more than 20 years, first as a founding member at IMRS/Hyperion Software (now Hyperion Solutions) and later cofounded OutlookSoft where he was President and CEO.

Craig is a frequent author on BPM topics and a monthly columnist for the Business Intelligence Network. He has led several jointly produced Web casts with Business Finance Magazine including 'Beyond the Hype: The Truth about BPM Vendors', the three-part vendor review entitled 'BPM Xpo' and 'BPM 101: Navigating the Treacherous Waters of Business Performance Management." He is a recipient of the prestigious Ernst & Young Entrepreneur of the Year award. BPM Partners is a vendor-independent professional services firm focused exclusively on BPM, providing expertise that helps companies successfully evaluate and deploy BPM systems. Craig can be reached at cschiff@bpmpartners.com.

Editor's note: More Craig Schiff articles, resources, news and events are available in the Business Intelligence Network's Craig Schiff Channel.